Environmental impact, interests and crypto mining

Certainly the environmental impact is one of the least addressed issues when thinking about the problem of cryptocurrencies. This list would probably be headed by its volatility and its risky relationship with the different economies of the world. But, of course, the environmental impact is not one of the biggest sources of “aversion” to these currencies.

However, and as we have previously said, the development of digital currencies cannot be turned away from their environmental effects.

Currently, the mining of cryptocurrencies has spread all over the world in so-called "mining farms". However, their impressive energy consumption puts these farms in places where energy is not that expensive. Clearly, regardless of whether its consumption is sustainable or not.

On the other side, there is the vigilant or, in other cases, "myopic" gaze of governments, which, according to their position on cryptocurrencies, decide to prohibit or promote it. In the first case, we have, for example, New York and recently China. And in the second, we have the case of Iran.

Regarding first caseWe have that Senator Kevin S Parker put on the table Bill No. 6486/2021 that basically proposed the temporary prohibition of mining in this state, until the mining companies present environmental impact studies that demonstrate acceptable values ​​for this condition. Beyond this being still a project, it can be identified that the genuine concern is to control the environmental impact.

On the other hand, we have the case of China, which very recently announced the massive closure of mining farms in different provinces, one of them being Sichuan, which is known for being the "cradle" of mining in this country. . According to Global Times, this closure is expected to reach 90% of the country's farms. This will undoubtedly be a very strong blow for this industry because it will represent a significant decrease in its mining capacity.

As we can see, in this case, the intention is not to take action in the face of the imminent environmental impact (which, of course, would have been a surprise), but rather it is one of the many measures that the Chinese government is taking to block the cryptocurrency market in his country. Probably because you have a digital home currency that you need to promote and promote.

On the other hand, we have the other side of the coin, those governments that promote it, regardless of the environmental consequences or that their own inhabitants suffer energy restrictions. This is the iranian government case that has arranged crypto mining as an industrial activity subject to an electricity tariff subsidy. Why? Subsidized crypto mining companies are authorized to carry out such activity by the government, with which their profits are affected by tax collection.

In this sense, the governments genuinely concerned about the environmental impact of this activity are few, the vast majority are more concerned about the impacts of this industry at the economic level. Of course, a great way to weaken the system is to attack cryptocurrency mining, since without it, transactions become slower and probably less reliable. Proof of this is that, since the news of the ban on farms in China, the price of bitcoin fell immediately. At the time of writing this note we can find it at just $ 32.

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Marilú Lazo
Lawyer from the Pontificia Universidad Católica del Perú (PUCP). Director of The Crypto Legal Blog, she has experience in corporate advice, consumer protection, as well as in matters of personal data protection and new technologies.

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